The newly-found business optimism, on the back of strong macro-economic fundamentals, a stable government at the helm and an improved pace of economic reforms.
The newly-found business optimism, on the back of strong macro-economic fundamentals, a stable government at the helm and an improved pace of economic reforms, is expected to continue through 2015 and drive M&A activity, observed EY in its sixth annual analysis of India’s M&A scenario.
Thomson ONE data showed, M&A activity involving Indian companies revived in 2014 with 870 deals and a total disclosed value of $28.6 billion. Compared to 2013, this represents a 17% increase in deal volume (742 deals in 2013) and a 6% increase in deal value ($27 billion in 2013). This also marked a decline in deal value over the past two years.
More importantly, the M&A market clocked 448 deals in H2CY14, the highest half-yearly volumes since H1CY11 and up 36% against the corresponding period last year.
“With a significant majority for the new government in May elections, M&A activity improved in the second half of the year. The government’s intent to accelerate the growth positively impacted the business environment, thereby improving investor sentiment,” EY stated in its note.
Inbound M&A activity is expected to rise further and be a significant driver for deal-making in 2015. On the domestic front, certain trends which were prevalent last year are likely to continue in 2015 as well.
Sectors like healthcare, pharmaceuticals and retail & consumer products are likely to witness a wave of consolidation in 2015 as companies, driven with the need to generate high growth are eyeing opportunities to strengthen market presence and add revenue streams to their existing business.
Domestic M&A drove the deal activity with 494 deals worth $16.2 billion, which accounted for 57% of both total deal volume and value.
EY expects 2015 to be stable for outbound deals, similar to last year. Companies in sectors like technology, automotive and pharmaceuticals will continue to assess acquisition opportunities overseas.